Procurement, Polmed, Buildings & Accommodation: SAPS, SAPU and POPCRU briefing

Meeting report

South African Police Service Supply Chain Management (SCM) briefing
Lt-Gen R Mokwena, Divisional Commissioner: Supply Chain Management, explained that generally, the procurement of goods, works and services is done through quotations or a bidding process within the threshold values as determined by the National Treasury. All procurement actions in SAPS are governed by Legislation and Prescripts which include, amongst others the following: Section 217 of the Constitution of the Republic of South Africa, 1996; Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000) and Regulations of 2017/04/01; Broad-Based Black Economic Empowerment Act, 2003 (Act No 53 of 2003). Public Finance Management Act, 1999 (Act 1 of 1999); State Information Technology Agency (SITA) Act, 1998 (Act No 88 of 1998) as well as National Treasury Instruction Notes and Circulars.

All national procurement approvals for quotations between R300 000 and R500 000 are finalised at National Supply Chain Management level whereas requirements for bids above R500 000 are finalised and approved at National level by the Bid Adjudication Committee. For provincial/divisional procurements, provincial and divisional procurement officers were delegated to finalise all procurement actions up to the threshold value of R300 000. Quotations in excess of this threshold must be forwarded to National Supply Chain Management office for approval. In compliance to National Treasury prescripts, SAPS submitted a procurement plan for publication and, thereafter deviations, expansions and other reports are submitted quarterly.

Lt-Gen Mokwena pointed out that SAPS dealt with emergencies such as protest actions as they occurred thus it would be impossible to adhere to the published procurement plan. Deviations for quotations above R1 million were reported to both National Treasury and the Auditor-General. Technological reforms such as the e-Tender Portal and Central Supplier Database were used. SAPS also complied with the legal reforms such as Public Procurement, Preferential Procurement Policy Framework Act, SCM Commercial Contract (Transversal Contracting) as prescribed. In respect of requirements received above the threshold value of R500 000 an open and competitive bidding process must be followed on condition that a proper demand in terms of the prescripts is received.

On its building projects, SAPS relied on the Department of Public Works (DPW) to satisfy requirements on all facilities/accommodation needs. The Department of Public Works had however granted approval to departments to satisfy certain requirements themselves. A new turnaround strategy has been adopted in SCM for future procurement actions in the built environment whereby a roster of reputable and capable companies will be implemented and utilised to assist with future requirements. The evaluation criteria of functionality will be utilised in the appointment of future service providers. Due diligence will also be conducted prior to an award to ascertain the capability of service providers

In an effort to mitigate risks such as corruption, fraud, collusion, fronting and organised crime, SAPS implemented a process whereby a Major-General at SCM overaw the opening and registration of bids received. Further, Procurement is in the process to finalise Bid Evaluation Committee locations (rooms) to be monitored by CCTV cameras with recording capabilities where all Bid evaluations will be conducted. Currently, all bid evaluation and adjudication committee meetings are recorded for good governance. Procurement and Contract Management has a risk register in place with mitigation actions against all identified risks. Due diligence was constantly conducted prior to award to ascertain the capability of suppliers. Directors of companies are verified prior to any award against the National Treasury Central Supplier Database as well as the Department of Public Service Administration website to determine whether they are State employed. Should it be found that a director is an employee of the State, the bidder is disqualified from the bid process.

Major-Gen T Mathidza, took the Committee through a presentation on SAPS facility management. Firstly, he outlined the police station construction process. It involves site clearance for an estimated period of 12 to 18 months, planning and design for an estimated period of 12-18 months as well as construction and occupation of the police station within 24 -36 months. The 2016/17 budget for facilities and built environment was R4.5 billion, shared between capital works, accommodation charges, municipal services and private leases.

On SAPS infrastructure development programme, capital works’ main focus areas were construction, repair and upgrades of police stations, victim-friendly units and acquisition of leased police stations and land. Intervention projects include the provision of open-plan offices in Phutshanditshaba (Free State), Coligny (North West), Masoyi (Mpumalanga) among others, to the tune of R78.6 million.

Identified challenges and factors inhibiting the timeous completion of capital works and planned maintenance programmes include inclement weather, community unrest, and poor performance by appointed service providers, consultants and contractors not meeting their contractual obligations and timelines, cancellation of contracts by appointed service providers as well as non-responsive bids as per specifications.

Major-Gen Mathidza pointed out that during a previous appearance before the Committee, on 8 March, SAPS was given a mandate to address the issue of landlords not maintaining their buildings. Consequently, letters were sent to those landlords requesting them to bring their buildings to compliance levels. Responses as well as project execution plans were expected by the end of May. It was also agreed that lease agreements would not be renewed if compliance issues were not dealt with. An in loco inspection was conducted on the Bellville building occupied by SAPS and the Directorate for Priority Crime Investigation (DPCI), with DPW appointing structural engineers to assess the building. Reports of the engineers indicated the building was sound and in good condition. However, after successive deliberations, it was revealed that DPCI had issues with sharing the building with SAPS, citing security concerns. SAPS would have to find an alternative building within the next six months.

On the Free State VIP protection building, DPW had “hit rock bottom” as they advertised for a building three times to no avail, and would have to go out on tender for the fourth time.

Major-General Mathidza, SAPS, said the Muizenberg project started in 2000, only to be reactivated in 2013 when the province requested that there be funding for the project. Tenders would be dispatched by mid-October and planning would commence by the end of July. Whilst R8.4 million had already been spent on the project, SAPS was advised to put the project on hold recently. For the 2017/18 financial year, no funds were allocated for construction.

Discussion
The Chairperson appreciated the presentations and indicated the Committee would need full reports on the accommodations aspects of the briefing. DPW, SAPS and DPCI would need to reappear before the Committee for further discussions on accommodation related matters. What the Committee heard from previous testimonies by DPCI on the Bellville building was totally different from what was being portrayed by SAPS. DPCI said the building was not suitable for human occupation. Also, something was seriously wrong if SAPS and DPW were failing to provide requisite accommodation and office space for VIP protection in Bloemfontein. Commitments were made a while ago and there seems to be no movement. He asked if all the procurement management staff indicated in the organogram of procurement and contract management were vetted. Had there been incidents of SAPS officials getting tenders within SAPS in the current financial year?

Ms M Molebatsi (ANC) asked if all tenders were published on the SAPS website. Was there a fixed-assets register? How many cases of corruption in the procurement process did SAPS investigate? Were there any prosecutions during the 2016/17 financial year? She also wanted to know if SAPS management went physically to check construction-related progress on the ground or relied on reports.

Lt-Gen Mokwena replied that all bids were advertised and SAPS has an up-to-date asset register in its administration system. DPW has the official asset register for immovable assets whereas SAPS has a secondary asset register of occupied buildings in order to account for incurred expenses. He added that SAPS management carried out physical inspections of on-going projects.

Mr L Ramatlakane (ANC) commented on the lack of progress in addressing concerns about the VIP protection building in Free State. Members identified the need for personnel stationed in that building to move and be accommodated somewhere more conducive a year ago. It was “dereliction” of responsibility by management, and it was totally unacceptable. The explanation Members were getting was different from one given during previous briefings- there was really a problem with SAPS relationship with DPW. He wondered how SAPS expected VIP protection to function effectively under such unconducive circumstances. There has not been a plausible explanation why lifts and other amenities within the building were in a bad state. Why was SAPS not finding alternative solutions in the interim while the DPW “tender jamboree” was taking place?
The Chairperson agreed and pointed out that the regional SAPS structures were not doing their job. He asked how many police stations were earmarked for construction in disadvantaged communities.

Major-General Mathidza replied that 80% of the police stations earmarked for construction would be in rural areas and previously disadvantaged communities. The construction of police stations and provincial headquarters was based on a needs assessment and trade-off were unavoidable. He indicated there were 24 capital works projects underway in the Western Cape. Khayelitsha, Makhaza and Nyanga projects had commenced and consultants have been engaged.

Mr J Maake (ANC) said upon the visit by Members in Free State, they were told one of the staff members was given leave as she was pregnant and could not climb stairs because the lifts were not working.

Ms M Mmola (ANC) said frustrations stemmed from the fact that a year had lapsed since the issue was raised. Paying rent for such an unmaintained building smacks of corruption. Also, it was the first time Members were hearing about office sharing by DPCI and SAPS in Bellville. Members could no longer discern between truths and untruths. She asked if the Auditor-General had detected any irregularities in the SCM system.

Mr Ramatlakane added that there was no need for SAPS or DPW to reappear before the Committee to give further explanations. The Committee had to reaffirm the position it made a year ago, that the VIP officials must be moved to a suitable place. If there was dereliction of duty, there should be consequences; SAPS was using “slippery language” to shift blame to DPW. He asked if SAPS had adopted the Integrated Financial Management System as per Treasury’s directive.

Mr P Groenewald (FF+) said accommodation issues boiled down to corruption. He asked about the number of police stations without generators.

Lt-Gen Mokwena replied that the information could be made available on a later date, however, almost all police stations currently had generators.

Mr Groenewald said he would need a comprehensive update as he was aware of stations without generators.

Mr Z Mbhele (DA) said the Bloemfontein building matter was urgent and needed immediate attention. He asked about implications of VIP protection for the former AU chief Nkosazana Dlamini-Zuma on SAPS demand management function. He noted that it took at least four to six years to complete the construction of a police station; six years was too long a time to build a police station and SAPS had to work on significantly reducing the timeframe. A significant amount of money had been spent on consultants towards building a police station in Muizenberg whilst no tangible results were evident so far.

Lt-Gen Stefan Schutte replied that timeframes in the construction of police stations were determined by the processes that had to be followed, such as feasibility and sustainability assessments among other. To a larger extent the processes were quite lengthy and took the indicated timeframes to complete. He explained that SAPS would have to go through DPW before acquiring alternative accommodation. Current prescripts prevent SAPS from engaging with landlords directly. Although SAPS had a budget for lease procurements, the procurement function itself rests with DPW. It was acknowledged that Bloemfontein VIP protection needed a new building right now but the buck stops with DPW. It would be irregular for SAPS to acquire a new building on its own. Also, VIP protection did not require any procurement deviations because it was part of running costs. The running costs involved would be a meagre amount in the bigger picture.

Lt-Gen Mokwena added that if the Committee gave SAPS the go-ahead to acquire an alternative building in Free State, it would be done immediately. The situation in Free State was a “thorn in the flesh” of SAPS management as well. All procurement officials were vetted, and there were SAPS members doing business with SAPS and for other government departments as well. However, SAPS Divisional Commissioner for personnel was taking action, and the statistics were available and could be furnished upon request.

The Chairperson interjected that Lt-Gen Mokwena’s response was problematic as the current Act clearly prohibited personnel within the employ of government from doing business with same.

Lt-Gen Mokwena clarified he was referring to the previous Auditor-General’s findings. The Auditor-General identified irregularities within SCM space and management was working on the identified challenges. However, current records showed that no SAPS members were involved in such activities. SAPS had not yet fully implemented the Integrated Financial Management System but pilot runs were being undertaken; SAPS has no objections in adopting the new model, but it must prove to be a better system than what is currently being used.

Mr Ramatlakane indicated the Committee submitted a report to SAPS on the state of the Bloemfontein VIP protection building in September 2015. Members well-understood all the procedural niceties involved and that DPW had to be part of the process. However, the well-being of the police officers, from a humane point of view, was paramount. SAPS should not explain it as if it was a newly emerged crisis. He pleaded the Committee and SAPS should not put stumbling blocks but commit themselves in finding solutions.

The Chairperson said if the health of SAPS members in Bloemfontein was taken as a priority, there was nothing that would prevent immediate action in addressing the challenge. SAPS had to report on the matter within seven days.

South African Police Medical Scheme (POLMED) briefing
Lt-Gen Adeline Shezi, Divisional Commissioner: Technology Management Services, SAPS, took the Committee through a presentation on the South African Police Medical Scheme (POLMED). There has been a marginal growth of 1.49% in principal membership, from 2015 to 2016. Child dependants and beneficiaries grew by 2.03% and 1.30% respectively. Also, principal membership and beneficiaries above 60 years grew by 5.21% and 6% respectively. POLMED saw a steady growth in membership, both principal and beneficiary since 2000. On membership by type, 83% were serving whereas 17% were continuation members.
On POLMED financial performance, member contribution has been on a steady decline since 2009. It stood at 6% as at 2016. Claims, expressed as a percentage of total contributions, have been on the rise; from 84% in 2010 up to 97.14% in 2016. POLMED non-medical costs have been on a downward trend since 2000, with non-medical costs at 4.87% in 2016. POLMED is currently financially sustainable. It enjoys a healthy solvency ratio of 49.10%, which is way above the stipulated 25%.

Lt-Gen Shezi indicated that, as part of compliance monitoring, the Council for Medical Schemes (CMS) sanctioned a routine inspection in January 2014 and a follow-up investigation on 28 August 2014. Directives were subsequently issued in May 2016, which required the POLMED board of trustees to address some gaps in relation to identified subject matters. Substantial progress has been made to address the matters identified.

Police and Prisons Civil Rights Union (POPCRU) briefing
Mr Nkosinathi Theledi, POPCRU General Secretary in submitting, indicated POPCRU’s overall satisfaction on the operations of the POLMED scheme. POPCRU members were pleased with the services rendered by the scheme and applauded the current Board of Trustees for the sterling job. Subsequent to POPCRU’s frequent review of POLMED annual financial statements for the preceding years, its view was that POLMED does comply with the relevant provisions of the Medical Schemes Act and International Financial Reporting Standards. POPCRU was thus pleased that POLMED executes its financial mandate in accordance with its charter and principles of good governance.

However, there was no direct communication between the CMS and POLMED members. Although the CMS was present during AGMs, they were normally observers, with no interaction with members. POPCRU deemed it necessary for the Council to be given a platform to introduce its role and frequently provide updates during Annual General Meetings (AGM) as it is inappropriate for POLMED and CMS to act in the interest of members who do not have a clear understanding of their role within the scheme.

Further, POPCRU was of the opinion that clause 6.2 of the Rules which immediately excludes members from the scheme upon retirement bears negative health implications on both member and beneficiaries. POPCRU recommended that the clause in reference be amended to accommodate retired members for a period of twelve months before clause 6.2.2 becomes effected. This is to allow a reasonable timeframe for the Government Employees Pension Fund to finalise members’ pay-out to enable them to continue paying for the scheme.

South African Policing Union (SAPU) briefing
Mr Mpho Kwinika, SAPU President, recounted irregularities within POLMED, dating back to 2009. He spoke of POLMED members’ salaries being arbitrarily deducted in 2009 without any prior engagements. Investigations were also done to identify the possible reasons for the low performance of POLMED in 2009. It was discovered that it approved management salaries from R1.4 million in 2009 to R3.4 million in 2011. Increments were clearly not performance-driven as the scheme was not performing at that time- mediocrity was being rewarded. Also, the investigations estimated the loss due to various irregular decisions at R300 million. The grievances were brought up during an AGM in Mafikeng in 2012, and when the matters did not receive the attention they deserved, a decision was made by SAPU to lodge a complaint with CMS. Critical recommendations were made by CMS, but had not been acted upon. There were serious governance issues in POLMED identified four years back, that had not been dealt with. SAPU was of the view that POLMED had to be put under curatorship, so that due process in the reinstitution of a credible board of trustees follows.

Discussion
The Chairperson wanted to know about the annual cost of POLMED to SAPS, and how many SAPS members were serving in the POLMED board of trustees. He asked for an indication whether issues raised by SAPU had been dealt with by POLMED.

Lt-Gen Shezi replied that the annual contribution was R6.5 billion in 2016. POLMED board of trustees consist of 14 members. Seven designated by the employer as well as seven elected. Any SAPS member could stand for election into POLMED board of trustees. She indicated that a progress report on challenges within POLMED would be made available to the Committee.

Ms Molebatsi noted a serious abuse of sick leaves within SAPS. She asked if the situation had changed.

Lt-Gen Shezi replied that it was difficult from the POLMED side to assess whether sick leaves taken by SAPS members were genuine or not. However, a doctor attendance monitoring system, part of disease management programs, was in place and could assess trends.

Mr Mbhele asked if the challenges around governance as recounted by SAPU had impacted on POLMED’s frontline service delivery.

Lt-Gen Shezi replied that POLMED’s poor performance between 2008 and 2009 was an industry-wide problem which coincided with the global recession during that period.

Ms Moola sought clarity on the allegations levelled on POLMED by SAPU.

Lt-Gen Schutte said at face value, it was difficult to discern if said governance issues affected POLMED’s performance. However, in terms of solvency ratios, claims payment and other indicators, POLMED was above average.

Mr Maake asked what happened to continuation members within POLMED, after leaving SAPS employ.

Lt-Gen Shezi replied that when a principal premium-paying member retires from SAPS, a three-month coverage was applicable. She felt the period had to be extended to twelve months to prevent members from falling-off the scheme.

The Chairperson asked SAPU and POPCRU to furnish the Committee with reports on their respective concerns. It was important to ensure POLMED was well-run because a lot of taxpayers’ money went to it every year.

The meeting was adjourned.